Industry News by Nemesis

Banks Snubbing Belgian Diamond Trade: AWDC

April 2, 2017

Belgian banks are discriminating against the diamond trade by not lending to anyone linked to the industry, the Antwerp World Diamond Centre (AWDC) has claimed.

The AWDC has proof that banks are systematically refusing customers with any connection to the trade, for both personal and professional banking affairs, it said last week. Lenders snub diamantaires even before they've had a chance to submit a formal application to become a client, the trade body alleged.

The banks’ rationale is that the diamond trade carries a high risk, the AWDC said. But it argued that this was an unfair perception, given how much regulation companies must undergo and the degree to which domestic and international organizations monitor diamond transactions.

Declining to offer banking services is not only limiting the Antwerp trade’s prospects for growth, it’s preventing the industry from becoming more transparent, the AWDC asserted, since a bank account is one of the requirements for registering a diamond business.

“Ironically, the systematic refusal to open bank accounts for those that are linked to the diamond industry is preventing companies interested in (re)establishing their business in Antwerp from doing so,” it said. “Without a bank account, you cannot trade nor establish a registered diamond company.”

Antwerp’s diamond trade has increasingly struggled to get credit. In January 2014, Amsterdam-based ABN AMRO began limiting its financing of rough-diamond purchases to 70% of the transaction value, rather than the whole amount. The following year, the trade suffered from the closure of the Antwerp Diamond Bank.

The AWDC said it had met 10 times with Belgian finance trade body Febelfin since 2014. Following those meetings, the trade body pledged to embrace the Sustainable Bank Account Access Scheme, under which companies go through an official audit so banks can keep their compliance spending low.

The Belgian trade’s new “Carat Tax” regime, which passed in December and features an independent valuation of diamond companies’ inventories, will also improve transparency, the AWDC added.

“The AWDC regrets that despite all the efforts and the attempts to engage in a constructive dialogue, the Belgian banks are still systematically refusing banking services to people in our trade,” it said.